‘Trap’: Huge money mistake costing Australians $2.5 trillion revealed

A huge 54 per cent of Australians are ignoring this huge opportunity to make extra money – and it’s costing them millions.

Everyone knows you need to invest if you want to get ahead. But so many Australians still don’t invest, with recent statistics showing that 54 per cent of Australians have no investments outside of their compulsory super fund and/or family home.

At the same time, increasingly we have larger financial and lifestyle goals that require serious wealth to be able to achieve. This equation just doesn’t work.

Ultimately, the main thing that holds people back from getting results and making progress is taking action. You want to invest, but there are too many options and too much information, it’s hard to know where to start, all the options are confusing and you don’t want to make a mistake – so you end up doing nothing …

When this happens, you miss out on the opportunity to get your money working harder and get more out of what you have today – what I refer to as the ‘inaction trap’. This is costly at any time, but today the cost is as high as it’s been in years.

Since the end of 2022, over three months the value of US tech stocks in the Nasdaq index have increased by 15.83 per cent (a staggering $2.569 trillion USD), delivering upside for investors.

The value of US tech stocks in the Nasdaq index have increased by 15.83 per cent. Photographer: Michael Nagle/Bloomberg

The key to success with your money is simple – if you want to get results, you need to take action. But simple doesn’t necessarily mean easy.

That being said, there are some key things you can do to put yourself in the best position to take confident action sooner – and ultimately start getting the results you want with your money faster.

Get clear on your next step

The first part of any solid action plan is where you confirm the move you’re about to make is the best one for you. The reality is that there are a lot of different ways to be right with your money, but there’s only one right next move for you.

Buy shares, buy property, pay down debt, boost your super, and the list goes on … These are all ‘good’ things you can do that will make you money.

The key to making the best move for you is to focus on your bigger goals and targets. Once you’re clear on what you’re aiming for, you should choose the next step that will help you make the most progress toward your target in the shortest amount of time.

Educate yourself

Once you’re clearer on your next step, you need to build your knowledge. This step is crucial to give you the confidence to take action, and to overcome the fear you might be headed for a costly mistake.

An important part of this stage is focusing on any risks or downsides that come with the money move you’re considering. There’s risk in everything; buying shares has risks, as does property and super, and even saving money in a bank account has some serious risks.

Risk can’t be eliminated altogether, but it can be reduced and managed – but you have to understand where your risk is coming from first.

See how your money move fits

Most people know that if you’re considering doing something with your money, that you should take the time to make sure it fits in with all the other things going on in your financial and non-financial world. But it’s in the application of this principle that most people fall down.

When people look at how a money tactic or investment fits in with their finances, they often first look in terms of their situation today. This is important, but it’s only part of the picture.

Bigger financial and investment decisions around shares, super, or buying property will impact your position not only today but for years into the future. This means that to effectively assess how well something will actually work for you, you need to look ahead at how this move will fit today and in the years ahead.

It’s crucial to educate yourself.

Look ahead before you take action and you’ll go a long way to making smarter choices that will drive better results.

Your action plan

It’s great to have great money ideas, but if you want results you have to take action. Once you’re clear on what you want to do, map out every single action step that’s needed to make it happen.

This becomes your checklist to follow to turn your ideas into outcomes, and gives you an easy guide to follow to get the results you’re looking for.

Put the time aside

Because we’re time poor, and because money is something that’s important but not urgent, it’s easy for money to get pushed down our to-do list for a tomorrow that never seems to come around.

If this happens, you create an opportunity cost today that will compound every year forever. If you want to get on the front foot with your money (and stay there) you’ll need to dedicate a small amount of time to keeping things moving forward.

Set up a recurring calendar appointment with yourself or with your partner to focus on your financial next steps, celebrate the progress you’ve made, and address any issues before they turn into problems. This will help you avoid the inaction trap and keep things moving forward.

The wrap

When you have time on your side, making small money moves consistently over time will drive serious results. But it won’t just happen on its own.

So many people get pumped up with great money ideas, but ideas without action are meaningless, and definitely won’t get you to where you want to be. If you want to put yourself in a position to take confident action sooner, you need a system that works.

As James Clear says in his blockbuster best-selling book Atomic Habits: “You don’t rise to the level of your goals, you fall to the level of your systems.”

Systemise the process you follow to take action on your money moves, and you’ll get the results you want faster and easier.

A bit of work to make it happen, but the results are worth it.

Ben Nash is a finance expert commentator, financial adviser and founder of Pivot Wealth, the creator of the Smart Money Accelerator, author of Replace your salary by Investing and host of the Mo Money podcast. He runs regular free online money education event which you can book here

Disclaimer: The information contained in this article is general in nature and does not take into account your personal objectives, financial situation or needs. Therefore, you should consider whether the information is appropriate to your circumstances before acting on it, and where appropriate, seek professional advice from a finance professional.